ZIMBABWE MONTHLY ECONOMIC REVIEW

Transcription

1 ZIMBABWE MONTHLY ECONOMIC REVIEW TABLE OF CONTENTS ISSUE NO. 25. MAY Commodity Prices 2. Macroeconomic Developments 3. Tourism Sector Developments 4. Stock Market Developments 5. The Corporate Sector 6. Trade Relations A publication produced by the African Development Bank (AfDB) 1. COMMODITY PRICES 1.1 Precious Metals Average gold prices declined by 12.6 percent from USD 1, per ounce in April 2013 to USD 1, per ounce in April 2014.The price of platinum declined by 3.8 percent from an average of USD 1, per ounce to USD 1, per ounce over the same period (Figure 1). Precious metals prices in April 2013 were supressed by the reduced demand from leading buyers like India due to government import restrictions on gold and China due to the economic slowdown. Furthermore, the selling off of precious metals by investors opting for alternative investment markets yielding higher returns has also weighed down on prices. On a month-on-month basis, prices of precious metals recorded marginal declines, with the gold price softening by 2.8 percent from an average of USD 1, per ounce in March 2014 to USD 1, in April. The price of platinum declined by 1.4 percent from USD per ounce, over the same period. The firming up of precious metal prices in the first half of the month were supported by weaknesses in the equities markets, resulting in investors opting for gold and platinum as stable options. The South African platinum mining strikes were yet to have an impact on the platinum prices, as suppliers were still able to meet their contractual obligations from buffer stocks. Figure 1: Monthly Average Prices of Gold and Platinum April April 2014 Source: Bloomberg and Reuters Zimbabwe Field Office In the second half of April, the precious metal prices were, however, undermined by the appreciation of the US dollar against the Euro, Japanese Yen and Canadian dollar due to reports indicating positive developments in the US economy. The reports include the housing statistics which

2 increased by 2.8 percent in March to reach 946,000 from the estimate of 920,000 and the slight increase in the Consumer Price Index (CPI) of 0.2 percent to an annual rate of 1.5 percent in the March 2014, which was too small to influence investors to hold precious metals. 1.2 Brent crude oil On a year-on-year basis, the Brent crude oil price increased by 5.1 percent from USD per barrel in April, 2013 to average USD in April 2014 (Figure 2). On month-on-month basis there was a slight increase of 0.19 percent in the average price. The improvement in Brent crude oil price was supported by the increase in demand for Brent oil by refineries as some were re-opening after closing for maintenance. The seasonal increase in oil demand for driving purposes in the Northern Hemisphere also helped strengthen the price. Furthermore, the disruption of supplies from North Africa, with the ongoing crisis in Libya and the looming fear of supply outages due to the Ukrainian crises also pushed up the price. Figure 2: Brent Crude Oil Prices April 2013 April 2014 (monthly average) Source: Bloomberg and Reuters 1.3 Wheat and Maize Compared to the month of March 2014, wheat prices for April 2014 were on a decline due to favourable prospects of the USA 2014 harvest season and reduced import demand from China. The wheat price declined from USD 344 on March 31 to USD 325 per tonne as at 10 April before improving to close the month at USD 350 (Figure 3). The political unrest in Ukraine, a major wheat exporter, helped the strengthening of wheat prices in the last week of April Figure 3: Daily Maize and Wheat Export Prices March - April 2014 Source: International Grain Council 2 Zimbabwe Monthly Economic Review May 2014

3 Maize prices in April 2014 were generally weak owing to sufficient global supplies. Bumper harvests in some of the largest northern hemisphere maize growing countries including the US have helped boost supplies. The price of maize declined from USD 234 per tonne on 31 March 2014 to USD 226 on 21 April 2014, before improving to close the month at USD 239 (Figure 3). 2. MACROECONOMIC DEVELOPMENTS 2.1 The Agricultural Sector Tobacco sales As at 29 April 2014, million kg of tobacco worth USD 344 million had been delivered to the market against 84.4 million kg worth USD million delivered in the last marketing season. The average price at which tobacco traded in April was USD 3.21/kg compared to USD3.72/kg recorded last year. Whilst there is continued increase in tobacco production, this success story needs to be replicated to all other crops and livestock activities where business is not as viable as in tobacco production. Government s policy stance on Agricultural trade In the first 4 months of 2014, the Government cancelled all export and import licences and embarked on revision of the rules and regulations governing imports and export of agricultural products. This was in response to farmers out cry for protection from imports that had flooded the local market. Zimbabwe s agricultural imports sharply increased from USD million in 2008 to USD 1.08 billion in 2013 (Figure 4). This was mainly due to poor performance of the agricultural sector over this period and even earlier. By 2012, production of the country s major cereals constituting maize and wheat had fallen to 60 percent and 39 percent of 2000 production levels, respectively. Milk production had even gone down to 30 percent of 2000 production level. The decline in maize, wheat and milk production partly explains why these products are in the top 10 list of agricultural imports for Zimbabwe. Figure 4: Zimbabwe s agriculture imports from South Africa and the World (USD millions) Source: UNCTAD The data from ITC Trade Map reveals that between 2008 and 2013, about 82 percent of Zimbabwe s agricultural imports came from South Africa, Zambia, Malawi, Mozambique and UAE, with the individual countries contributing about 56 percent, 17 percent, 3.3 percent, 3.2 percent and 2.3 percent of the imports, respectively. May 2014 Zimbabwe Monthly Economic Review 3

4 Table 1: Zimbabwe s top 10 agricultural imports from the World Product Code Product label Average imports (000 USD) '10 Cereals 312, '15 Animal, vegetable fats and oils, cleavage products, etc 146, '24 Tobacco and manufactured tobacco substitutes 87, '11 Milling products, malt, starches, inulin, wheat gluten 80, '17 Sugars and sugar confectionery 60, '19 Cereal, flour, starch, milk preparations and products 56, '23 Residues, wastes of food industry, animal fodder 50, '21 Miscellaneous edible preparations 39, '04 Dairy products, eggs, honey, edible animal product nes 38, '22 Beverages, spirits and vinegar 37, Source: ITC Trade Map Table 1 shows the top 10 agricultural imports for Zimbabwe from the world including South Africa. Cereals and oils topped the list of imports. Agricultural imports constituted about 17.1 percent of Zimbabwe s total import bill between 2008 and In March 2014, the Government introduced the control of chicken imports that are threatening the domestic poultry industry through Statutory Instrument 6 of The Government went on to pronounce a ban on fresh fruits and vegetables on 2 April The idea was to control trade flows of agricultural products based on demand and to create a market for the local farmers. While agricultural production is recovering, the country needs to produce more to meet national demand. Agricultural trade flow data reveals a negative trade imbalance for Zimbabwe. The negative trade balance could still increase if the control of imports of agricultural products is not accompanied by measures to curb smuggling. Experience has shown that import bans are ineffective where a country s borders are porous or where there are loopholes in the enforcement of the bans. Productivity and competiveness of local production needs to be increased in order to improve consumer welfare. In this regard, the government needs to effectively implement strategies spelt out in the Food Security and Nutrition Cluster Matrix in the ZIM-ASSET. Inevitably increased productivity and competiveness will not be achieved without addressing the challenges and capacities of farmers to increase production to meet both local and export demand. Capacities need to be improved in the areas of crop production and marketing; livestock production and development as well as agricultural infrastructure. Improving farmers capacities and capabilities will help to improve the quality and competiveness of their products in both the local and international markets. The import ban should be temporal to correct the observed anomalies; reposition local producers to be competitive and ensure that the competition from foreign products is fair. Perpetuating the ban can also create adverse incentives for local farmers which may breed inefficiencies and uncompetitive production methods. In instances where government has to issue export or import permits, there is need to establish the level of deficit for each product so as to ascertain the number of permits to be issued as this will help in avoiding shortages on the market. 2.2 The Mining Sector Statistics from the Chamber of Mines reveal that total mining earnings for Zimbabwe (excluding diamonds) decreased by 12.5 percent, from USD million in the first quarter of 2013 to USD million in the same quarter in The decrease in revenue can be attributed to lower mineral prices on the international market. Gold was the major contributor to total revenue, accounting for percent, whilst platinum contributed percent. The initiative by government to legalise operations of illegal gold miners/panners and capacitate the small-scale gold producers can lead to an increase in revenue flows to the fiscus as the country is underpinning its recovery on the proceeds from the mining sector. Gold Deliveries On a year-on-year basis, total gold deliveries decreased by 3.93 percent from kg in April 2013 to kg in April 2014 (Figure 5). Deliveries by primary producers decreased by Zimbabwe Monthly Economic Review May 2014

5 percent from kg in April 2013 to kg in April 2014, whilst deliveries by small-scale producers increased by percent from kg in April 2013 to kg in April Figure 5: Gold Deliveries from April 2013 to April 2014 Source: Fidelity Printers and Refineries Meanwhile, the government of Zimbabwe has reiterated that permits for chrome ore exports will not be issued in a move to promote the country s policy on value addition and beneficiation of minerals. According to the Deputy Minister of Mines and Mining development, the country has redundant chrome refineries in Chegutu, Kadoma and Kwekwe which could be utilised for value addition of chrome and therefore optimise on the export revenues from the mineral. Government envisages that the total ban on chrome ore exports is likely to force companies to revive the redundant chrome ore refineries, hence creating employment in the process. 2.3 Inflation There was a marginal increase in annual inflation from percent in March 2014 to percent in April 2014 (Figure 6). Annual food & nonalcoholic beverage and non-food inflation stood at percent and 1.50 percent, respectively. Factors underpinning the marginal increase in annual inflation in April 2014 were alcoholic beverages & tobacco (1.78 percent); restaurants & hotels (1.13 percent); and housing, water, electricity, gas & other fuels (0.46 percent). Despite the marginal increase in inflation, price decreases were also noted in food & non-alcoholic beverages (-3.73 percent); furniture & equipment (-2.60 percent); and miscellaneous goods & services (-1.56 percent). Figure 6: Inflation Developments in April 2014 Source: Zimbabwe National Statistics Agency (ZIMSTAT) May 2014 Zimbabwe Monthly Economic Review 5

6 Month-on-month inflation gained 0.8 percentage points as it rose from percent in March 2014 to 0.58 percent in April Month-on-month food & non-alcoholic beverages and non-food inflation stood at percent and 1.09 percent, respectively. The increase in month-on-month inflation was underpinned by the increase in the prices of recreation & culture (0.34 percent); and transport (0.33 percent). On the other hand, price decreases were noted in restaurants & hotels (-1.02 percent); furniture & equipment (-0.75 percent); and food & non-alcoholic beverages (-0.46 percent). 2.4 Interest Rates Commercial bank weighted average lending rates for individuals and corporates softened from percent and percent in March 2013 to percent and 9.27 percent, respectively. On the other hand, merchant bank weighted average lending rates for individuals and corporates tightened from percent and percent in March 2013 to percent and percent in February 2014, respectively (Table 2). Table 2: Interest Rate Levels (Annual Percentages) End period Commercial banks lending rates Nominal rate Merchant banks lending rates Weighted average Nominal Weighted average Individuals Corporates rate Individuals Corporates 3-Month deposit rate Savings deposit rate Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Average Although average weighted lending rates have generally declined, banks have slowed down their lending activities on the back of high nonperforming loans. Monetary Developments Annual growth in broad money supply (M3), defined as total banking sector deposits (net of inter-bank deposits), declined from 10.5 percent in March 2013 to 7.8 percent in March 2014 (Figure 7). Similarly, month-on-month M3 growth declined from 3.4 percent in February 2014 to 1.8 percent in March The decline mirrors the general slowdown in economic activity. The decline in M3 growth generally reflects subdued economic activity. 6 Zimbabwe Monthly Economic Review May 2014

7 Figure 7: Monetary Developments (M3) Annual total banking sector deposits increased from USD 3.80 billion in March 2013 to USD 4.09 billion in March 2014 (Figure 8). On a month-onmonth basis, total banking sector deposits increased from USD 4.02 billion in February 2014 to USD 4.09 billion in March This increase could be attributed to inflows from tobacco sales which are largely financed by offshore sources of funds. Figure 8: Level and Growth Rate of Total Banking Sector Deposits, March 2013 to March 2014 At the end of March 2014, demand deposits and savings & short-term deposits increased by 0.57 percent and percent, respectively compared to February 2014 (Table 3). Long-term deposits declined by 9.29 percent while savings and short-term deposits have been increasing over the period January 2014 to March 2014, showing some reluctance by depositors to commit long term to the banking system. May 2014 Zimbabwe Monthly Economic Review 7

8 Table 3: Composition of Total Banking Sector Deposits (USD billion) Type of deposit January 2014 February 2014 March 2014 Monthly increase (absolute) USD billion Monthly increase (percent) Demand Deposits Saving & Short-Term Deposits Long-Term Deposits (0.07) (9.29) Total Deposits As at end of March 2014, the composition of total bank deposits was as follows (Figure 9): demand deposits (49.68 percent), savings and short-term deposits (33.55 percent) and long-term deposits (16.78 percent). Figure 9: Composition of Total Banking Sector Deposits for March 2014 The loan-to-deposit ratio, calculated on the basis of total bank deposits as well as external and domestic sources of funding declined from 95.3 percent in March 2013 to 88.2 percent in March 2014 (Figure 10). There has been a sustained decline in the loanto-deposit ratio since November 2013, reflecting tighter credit policies by banks in response to rising non-performing loans. Figure 10: Loan-to-Deposit Ratio: March 2013 to March Zimbabwe Monthly Economic Review May 2014

9 In March 2014, bank credit to the private sector was distributed as follows (Figure 11): loans and advances (78 percent); mortgages (11percent); other investments (8 percent); bills discounted (2 percent and bankers acceptances (1 percent). Figure 11: Distribution of Bank Credit to the Private Sector in March 2014 The sectoral distribution of the bank loans and advances to the private sector was as follows (Figure 12): agriculture (18.49 percent); individuals (18.40 percent); distribution (18.15 percent); services (16.07 percent); manufacturing (14.52 percent); other sectors (8.07 percent) and mining (6.30 percent). Figure 12: Sectoral Distribution of Banking Sector Loans & Advances as at end of March 2014 Individuals received the second largest share of credit from agriculture which is only higher by 0.9 percentage points. Services and Distribution received more credit than the manufacturing sector. This reflects the changes in the structure of the economy. It is quite possible that credit to individuals is not necessarily funding consumption but small to medium scale business activities. The preference for lending to individuals is also partly due to the tiered interest rate structure where average lending rates towards individuals are higher compared to corporates. While this tiered interest rate structure is meant to discourage consumptive individual borrowing, it is also likely incentivizing banks to lend towards individuals. Other Financial Sector Developments The values of all the transactions processed through the Zimbabwe Electronic Transfer Settlement System (ZETSS) and cheques declined, while transactions values for the card system and mobile and internet service increased over the period March 2013 to March May 2014 Zimbabwe Monthly Economic Review 9

10 Table 4: ZETSS, Cheques, Card, Mobile and Internet Transaction Activity ((USD Million) Month ZETSS Cheque Values Card Values Mobile & Internet Mar-13 3, Apr-13 3, May-13 3, June-13 3, July-13 3, Aug-13 3, Sep-13 3, Oct Nov Dec-13 3, Jan-14 3, Feb-14 2, Mar-14 3, Average 3, , March The Fiscal Sector Revenues outturn For the third consecutive month in 2014, Government revenue outturn of USD million in March 2014 missed the target of USD million. Cumulative revenue outturn to March 2014 amounted to USD million (Figure 13), and was 7.8 percent lower than the cumulative target of USD million. Furthermore, the cumulative revenue outturn to March 2014 was 3.88 percent lower than the USD million realised over the same period last year. The overall revenue underperformance can be attributed to the prevailing macroeconomic challenges, including company closures; liquidity constraints and general decline in the price level (see section on inflation developments). The major tax heads that underperformed included: VAT ( percent), customs duty ( percent), corporate tax (-6.46 percent) and excise duty (-1.84 percent). On the positive side, growth in revenues was realized in PAYE (10.86 percent), on the back of follow-ups and remuneration audits by the Zimbabwe Revenue Authority (ZIMRA). Further, ZIMRA has intensified efforts to enforce compliance with tax regulations, which have somewhat, helped counter the negative effects of the prevailing economic environment on revenue collections. Figure13: Fiscal developments from January to March 2014 in USD millions Source: MoFED 10 Zimbabwe Monthly Economic Review May 2014

11 Expenditure Outturn Monthly government expenditure has been trending upwards from USD million in January 2014 to USD million in March 2014 (Figure 13). Cumulative expenditures for the first quarter of 2014 amounted to USD million, percent lower than the same period in 2013 (Figure 13). During the first quarter of 2014, recurrent expenditures accounted for percent (i.e. USD million), whilst capital expenditures accounted for 3.06 percent (i.e. USD23.48 million), with the remainder 1.75 percent being long term loans by the government. The Government wage bill remains a major downside risk towards fiscal sustainability, with employment costs and pensions, accounting for percent of recurrent expenditures and percent of total expenditures at USD million. Overall, the Government maintained a cumulative cash surplus of USD 38.6 million. 2.7 The External Sector Imports during the first quarter of 2014 totalled about USD 1.4 billion, a decrease of about 11.6 percent compared to the first quarter of Exports on the other hand were about USD million for the first quarter, a significant decrease of about 23 percent compared to the first quarter of 2013 (Figure 14). Thus while the decrease in imports would have helped to reduce the trade deficit, the fall in exports ensured that the trade deficit remained more or less at the same level compared to the first quarter of 2013 (Figure 14), as it only fell by about 0.5 percent to USD million. Thus, the trade deficit is still more than the value of exports, underlying the need for measures that boost exports significantly while imports are contained. This includes production incentives for exporting firms as well as easing their cost of doing business to ensure increased competitive production for both the local and export markets. Figure 14: Imports and exports for the first quarter, 2013 and 2014, Zimbabwe Source: ZIMSTAT Imports continue to be dominated by fuel and lubricants, which constituted 24 percent of imports during the first quarter of 2014, an increase from 20 percent during the same period in Fertiliser constituted 3 percent of imports compared to 2 percent of imports in The importation of maize also increased in 2014 despite a bumper harvest being anticipated, mostly because the crop was not ready for harvest during the first quarter. Maize imports increased from only 1 percent of imports in 2013 to 4 percent of imports in 2014, having increased by about USD47.2 million. The main drivers of exports continue to be primary agriculture and mineral products. Semimanufactured gold constituted about 19 percent of exports while diamonds constituted about 13 percent of exports. On the other hand, tobacco (excluding cigarettes) constituted about 15 percent of the exports, while sugar constituted about 6 May 2014 Zimbabwe Monthly Economic Review 11

12 percent. Overdependence on primary products could also explain why exports continue to be volatile, as these are influenced by fluctuations in commodity prices in the international markets. Exporting value added products could help stabilise exports while at the same time increasing the export value to help the country s precarious balance of payments position. 3. TOU RISM SECTOR DEVELOPMENTS The Reserve Bank of Zimbabwe (RBZ) is set to enhance the process of accounting for export proceeds from hunting safari tourism sub-sector through the computerization of Hunting Return Form 2 (TR 2), as announced in the Monetary Policy Statement for 2014 and the Exchange Control Directive PR09, issued on 31 January The accounting for the export earnings in hunting safari tourism using TR 2 has been associated with many challenges which resulted in the illicit flow of foreign exchange outside the country. To facilitate the computerization of hunting return form TR 2, a steering committee composed of stakeholders from the Safari Operators, RBZ, Parks and Wildlife, Zimbabwe Tourism Authority, Hunting Trophy Processors and Bankers Association of Zimbabwe was established. Consultation workshops to this effect were organized. All hunting safari operators in the country are required to be registered under the new computerized system known as the Tourism Receipts Accounting System 2 (TRAS 2). The implementation of the TRAS 2 will improve efficiency in the exchange of information among the government, safari operators, and regulatory authorities. The system will enable electronic processing of export documentation, thereby eliminating delays associated with paper filing which often increases the cost of operations in terms of time and money. Furthermore, the TRAS 2 will also help improve efficiency and transparency in export revenue earnings by hunting safari operators and closing leakages of the much needed foreign earnings from the Zimbabwean economy. The TRAS 2 system will however be fully implemented by January Computerisation of systems however should go beyond the hunting tourism sub-sector to all other tourism sub-sectors in order to enhance efficiency. Another tourism development in the month of April, was the hosting of the A Sambeni Africa Tourism and Travel Expo from April 2014 during the Zimbabwe International Trade Fair (ZITF) week. The A Sambeni expo focused on promotion of the meetings, incentives, conferences and exhibitions (MICE) tourism. The event presented local MICE players with opportunities to network with other players locally and across the borders as well as market their products and services. There is need for the tourism authorities to assist local MICE operators with market information and guidelines to ensure that the very best of unique products and services are showcased, in order to place the country on an international MICE tourism arena. The successful co-hosting of the UNWTO in August 2013 proves that there is potential for Zimbabwe s MICE players to host international events, with necessary support from government and tourism authorities. 4. STOCK MARKET DEVELOPMENTS In the month of April 2014, the industrial index opened trading at losing 3.64 points to close at , whilst the mining index opened the month at 29.5, gaining 0.14 points to close at There was an increase in stock market activities in the month of April 2014 compared to March 2014 as both turnover value and volume increased by 77 percent and 12.4 percent, respectively. However, despite the increase in stock market activities, market capitalisation declined by 1.9 percent from USD 4.56 billion in March 2014 to USD 4.47 billion in April 2014 weighed down by the poor performance of the industrial index. 12 Zimbabwe Monthly Economic Review May 2014

13 Figure 15: ZSE Industrial and Mining Indices from April 2013 to April 2014 Source: Zimbabwe Stock Exchange On a year-on-year comparison, the industrial index in April 2014 closed at below its performance in April 2013 in which it closed the month at On the other hand the performance of the mining index in April 2014 continued to decline by closing the month at compared to in April 2013 (Figure 15). A comparison of stock market activities in April 2013 and 2014 shows that in 2014 turnover value and volume increased by percent and percent, respectively. Despite the positive performance of stock market turnover, market capitalisations declined by 8.6 percent from USD4.89 billion in April 2013 to USD 4.47 billion in April 2014 weighed by the poor performance of the industrial and mining indices. Table 5: Summary Statistics for the Zimbabwe Stock Exchange for April 2013 and 2014 April-2013 April-2014 Percentage Change Turnover Value (USD) 26,015, ,346, Turnover Volume 157,132, ,085, Value Shares bought by foreigners (USD) 17,704, ,177, Value Shares sold by foreigners (USD) 7,691, ,230, Volume Shares bought by foreigners 45,918,490 95,995, Volume Shares sold by foreigners 26,845,992 62,457, Market Capitalisation (USD) 4,894,677,096 4,473,512,145 (8.60) Source: Zimbabwe Stock Exchange (2014) There was increased participation of foreign investors on the local bourse in April 2014 as the value of shares bought and sold by foreigners increased by percent and percent, respectively. On the other hand the volume of shares bought and sold by foreigners also increased by percent and percent, respectively (Table 5). Meanwhile, the chemical manufacturer, Chemco Holdings has delisted from the Zimbabwe Stock Exchange as it prepares for its restructuring process. Trading in Chemco shares was suspended in 2012 at the request of shareholders. May 2014 Zimbabwe Monthly Economic Review 13

14 5. THE CORPORATE SECTOR The recent changes to the policy regime governing agriculture imports (see section 2.1) is likely to have some short-lived negative effects in the corporate world, especially due to expected temporary shortages of produce in retail outlets and raw materials to the manufacturing sector. These measures are likely to create some short term challenges for the retail and manufacturing industries. For example, most big supermarket chains such as OK and SPAR registered some shortages in fruit and vegetables as well as associated processed food following the announcement. The effects are also likely to cascade to the manufacturing industry, given the reliance on imported products as raw materials by agro-processing industries. It will also take some time before the firms are able to find local producers with the capacity to meet their needs in terms of both quality and quantity. Farmers, through their unions, indicate that they have the capacity to supply the local market. In this regard the local farmers need to increase production of quality agricultural produce that to meet the needs of the local market. Increase in agricultural products is necessary to close the gap created by the ban of agricultural imports, and avoiding the destabilising price increases induced by shortages in agricultural produce. While the process is going on, some slump in manufacturing activities would be expected. Thus sudden policy reforms tend to cause some distortions in the market which can be easily avoided by announcing the policy reform in advance to allow some preparatory time for economic agents to manage the transition. 6. TRADE RELATIONS African and European Union Heads of State and Government, the President of the European Council, the President of the European Commission, the President of the African Union (AU) and the Chairperson of the African Union Commission (AUC), met in Brussels on 2-3 April 2014 for the EU Africa Summit. This event was held under the theme Investing in People, Prosperity and Peace, with the objective of addressing common challenges and bringing concrete benefits to our citizens in accordance with the Joint Africa-EU Strategy (JAES) Amongst the many issues discussed was the progression of the negotiations on Economic Partnership Agreements (EPAs) where parties committed to continue working on outstanding issues. Members were urged to do so by exploiting all the possibilities to reach a satisfactory conclusion of development-oriented and WTOcompatible EPAs that promote African integration, economic transformation and industrialisation, and ensure the prosperity of nations to the benefit of both continents. Negotiations that were launched at the all ACP level in September 2002 and at the regional level in 2014 are yet to reach a conclusion due to failure to resolve contentious issues that emerged during the negotiations. These include export taxes, the most favoured nation (MFN) clause, agricultural safeguards and the rules of origin. Zimbabwe, along with Mauritius, Madagascar and Seychelles signed the Interim EPA with the EU in May 2012 and the parties have been carrying the negotiations under the Eastern and Southern African Configuration. Zimbabwe has already ratified the Interim EPA agreement but implementation is still pending owing to some anomalies on its tariff schedule which had been aligned to the Common Market for Eastern and Southern Africa (COMESA) Common External Tariff. Zimbabwe is focusing on improving competitiveness of its industries for the country to improving its international competitiveness in order to benefit fully from international trade agreements. 14 Zimbabwe Monthly Economic Review May 2014